The Tata Group on Tuesday announced the merger of its two airlines Vistara and Air India. With this consolidation, Air India will be India’s leading domestic and international carrier with a combined fleet of 218 aircraft, making it India’s largest international carrier and second-largest domestic carrier.
Vistara shall be merged with Air India post-receipt of requisite approvals. As part of the merger transaction, SIA shall also invest Rs 2,059 crore in Air India. Post the consolidation, SIA shall hold 25.1 percent shareholding in Air India. The transaction is estimated to be completed by March 2024. Air India, an airline fully owned by Tata Sons, has been the flag carrier of India. Tata Sons, via its fully-owned subsidiary Talace Private Limited or Talace, acquired a 100 percent stake in Air India on January 27, 2022.
Vistara, a 51:49 joint venture between Tata Sons and Singapore Airlines Limited (SIA), had been established in 2013 and is India’s leading full-service carrier with international operations in the Middle East, Asia, and Europe.
On this occasion, N Chandrasekaran, Chairman, of Tata Sons, said: “The merger of Vistara and Air India is an important milestone in our journey to make Air India a truly world-class airline. We are transforming Air India, with the aim of providing a great customer experience, every time, for every customer. As part of the transformation, Air India is focusing on growing both its network and fleet, revamping its customer proposition, enhancing safety, reliability, and on-time performance.”
The Chairman added, “We are excited about the opportunity of creating a strong Air India which would offer both full-service and low-cost service across domestic and international routes. We would like to thank Singapore Airlines for their continued partnership.”
Goh Choon Phong, Chief Executive Officer, of Singapore Airlines, said: “Tata Sons is one of the most established and respected names in India. Our collaboration to set up Vistara in 2013 resulted in a market-leading full-service carrier, which has won many global accolades in a short time.”
“With this merger, we have an opportunity to deepen our relationship with Tata and participate directly in an exciting new growth phase in India’s aviation market. We will work together to support Air India’s transformation programme, unlock its significant potential, and restore it to its position as a leading airline on the global stage,” the CEO said. (ANI)
Debashree Mukherjee, 39, an HR Professional and a frequent flyer, says if Tatas can turn around a debt-laden Air India, it will be the revival story of the century
Before the pandemic struck, my husband, daughter and I used to travel a lot, both within the country and abroad. In the domestic circuit, Air India and Tata Group’s Air Vistara were most often our chosen carriers. However, for international routes, we didn’t prefer Air India because better services were available at the same price in other airlines. If we could transfer/interchange flyer miles to other airlines, we would do that too.
So when the Air India’s acquisition by Tata Group was announced recently, I felt connected. Given how people-oriented Tata’s policies are, I know that the current employees won’t be left in the lurch (unlike say the scenario at Jet many years ago). Having said that I am skeptical of the profitability of Air India. I don’t doubt Tata’s efficacy but I feel that Air India’s condition is very, very difficult and it will be mighty challenging for even Tata to pull it off.
The debt-laden airlines is in the best hands I believe, but is the best good enough? If Tatas can turn it around, there cannot be a better revival story than this. And given the fact that it was Tatas who started Air India before it was nationalised, maybe the emotional connect will bring about some solid changes. Tatas will have to be ‘disruptive’ if they believe that Air India can be brought back to its original glory.
Mukherjee says travelling is an experience be it for business or vacation
Travelling is an experience, be it for recreation or business and Air India needs to tap into that. A certain spark is missing in the airline, though we preferred it so far because of the extra facilities it provided – like an extra 10 kg baggage allowed in comparison to other airlines or an extra 30 kgs if you are a Star Gold member as well as complimentary meals.
But how often do we need to travel with such heavy luggage? Not many times. Air India will need to be more people-centric and customise its services, which I believe Tatas can do. Even though there are confirmed complimentary meals, the food quality could definitely be enhanced.
While in domestic travel, the leg room in Air India is the same as all other airlines, when it comes to long-distance international travel, Air India has less leg space than other airlines. We travel business class and relaxation is right up there on our priority list as a family, since my little girl also travels with us.
Air India has come to represent India with its involvement in various difficult rescue missions, and I believe even after it is privatised, the sentimental value will continue to be there. I believe that will play an important part in rebuilding brand Air India.
And given how much I enjoy flying Air Vistara, run by Tata Group, if they can revive Air India and bring it at par with Air Vistara, none would be happier than me. Vistara has new world amenities, amiable and cooperative attendants and customised, good quality food services. The most recent flight that I took was with Vistara around September end and even in these times of pandemic, it was a good experience.
I sincerely hope the skies open up completely like before and we are free to travel the world again and explore its wonders.
The Tata acquisition of Air India has unleashed high-decibel social media buzz, much of it bullish yelps in favour of the Tatas who were the original owners of the airline before it got nationalised in 1953. The privatisation of Air India has taken 20 years since it was first attempted back in 2000. And the saga of what happened to those attempts and why they were unsuccessful over the past two decades is well-documented. In that context, the Tata acquisition is certainly welcome but could it be too early to rejoice? With the acquisition of the flagship airlines, the Tata’s have also inherited a daunting challenge.
In the best of times, the air travel business can be a dicey proposition. In the wake of the Corona pandemic, things have been devastating for the sector. A recent McKinsey & Co. report on the prospects for the sector post Covid estimates that in 2020, global industry revenue totaled $328 billion, around 40 percent of what it was in 2019. For perspective, it means the sector’s revenue in 2020 is the same as what it was in 2000, that is, two decades ago. What is more, McKinsey estimates that the sector will continue to remain smaller (and may even shrink further) in the years to come. To be sure, the consulting firm projects that air traffic won’t return to 2019 levels before 2024.
Air India has an accumulated loss of Rs 77,953 crore and debt of Rs 61,562 crore. And although the pandemic may have wreaked havoc on the company as it has on every airline in the world, it must be noted that Air India never made profits since 2007 when the state-owned domestic airline, Indian Airlines, was merged with it. That is, no profits at all in the past 14 years.
So, to bring things back to the ground, the Tatas have a task on their hand. The global environment for the aviation business is something that airlines companies have little control over besides being smartly reactive to it. But Air India has a host of other issues that have to be tackled. First, it may be the Tatas’ largest interest in the sector but it is by no means their only aviation business: besides Air India, the Tatas have Air Asia in which they own a nearly 85% equity stake; and Vistara in which they own 51% stake (Singapore Airlines has the rest). It would be interesting to see how the Tatas configure their airlines business in a way that is best for each of these entities. Will they go for a merger? Or operate them independently?
Second, there is the question of management of Air India.The airline has not had a professional CEOin a while and it is a bureaucrat, the civil aviation secretary of the Government of India who has been officiating in that role. The Tatas would have to embark on a search for a suitable person to helm the company.
Third, there are the financial liabilities and operational losses. The Air India acquisition also comes with retirement benefits that the airline pays to nearly 55,000 retired employees. But that is small change compared to the investment needed in modernising the airline’s fleet of aircraft. Air India and its subsidiary has 117 aircraft, while its subsidiary the low-cost Air India Express has 24. Many of these need to be replaced or equipped with new engines and that would entail hefty expenses.
Finally, the airline operates on many routes that are not remunerative. During its years under government ownership, meddling by the ministry has often led to adding routes on political and not economic considerations. Air India’s new owners will need to sort those out as well. For the Tatas, getting back control of what they once owned (very long ago) is only the beginning of a long journey.
No Bail For Aryan Khan
A raid conducted by the Narcotics Control Bureau on October 2, reverberated through newsrooms and social media platforms throughout this week. While eight people were arrested from a party on a luxury cruise ship, Cordelia, on Mumbai’s shores, the one name among them that has hogged all the limelight is Aryan Khan, son of Bollywood superstar Shahrukh, “King Khan” or SRK as he is better known.
Fans are frantic in their protests that he is being targeted by the Narendra Modi government for his closeness to the Thackeray family. They cite the role of a local BJP supporter who gave the tip off and accompanied the NCB sleuths during the raid, to drive home the point that the Centre wants Khan to “fall in line” or else. On the other side of the debate are those who consider Bollywood a drug den, where,they allege, drug abuse is rampant and there is a huge demand for illegal drugs. This group cites the drug links that surfaced after the death of talented young actor Sushant Singh Rajput last year, involving top film stars.
The debate spilled over to political circles this week. NCP and Shiv Sena leaders, including chief minister Uddhav Thackeray have questioned the legal alacrity in drug bust case, conrasting it with the lethargic action in Lakhimpur case where a union minister’s son was involved in running over a vehicle on farmers.
Both sides have ignored the facts. First, the Narcotic Drugs and Psychotropic Substances Act has strict provisions to keep those charged under it behind bars. This means the bail under NDPS is difficult to get. In comparison, the bail provision under road accidents comes under culpable homicide. So comparing the Lakhimpur with Mumbai drug bust is unfair (Salman Khan allegedly ran his SUV over Mumbai footpath dwellers in 2002 and was granted easy bail, and later acquitted).
However, coming to the drugs case, the NDPS provisions were supposedly made tough to discipline drug dealers and peddlers, not the user. From university students, young corporates, party circuit regulars to hill trekkers and religious Hindu hermits, use of banned drugs is common. From Kumbh festival to Kanwad Yatra, use of psychotropic substances is more a spectacle than a hush-hush matter. Yet, the NCB team targeted only the users, in this case high-profile, clearly raising doubts. In any case, the Modi government at the Centre is now considered, not without reasons, using central investigating agencies to make their critics or opponents fall in line.
What probably in this vendetta politics, the powers that be do not realise that they are playing with the lives of several youth. The prison atmosphere can be an overwhelming experience for an undertrial. In high-profile cases, this may scar their psyche for life. What good can come out by keeping a band of 20-somethings in judicial custody for experimenting with banned substances for an occasional kick? Lawmakers and law enforcers must keep that in mind
The one thing Air India has become good at is going around the world and at each stop collecting debts. Daily it clocks up $3 million loss for the Indian taxpayer. Now it has decided to go back to base and stop this addiction. That is it has gone back to the point when it first started conflating financial loss with nationalism. It is back home now with the Tatas where it was cocooned and spent its growing years. After a 68-year spree of carefree ‘awaragardi’ it is going to become a responsible airline.
JRD Tata started the airline back in the 1932 and named it Air India in 1948. It was a good airline with growing reputation under the Tata family business. However another family owned business, the Congress Party, probably fancied the name Air India and wanted the brand under it. Although not having enough money, the Congress Party had the power of the State in its hand. So it nationalised Air India in 1953. A lot of good and well working industries, institutions, banks and political entities were nationalised by Nehru’s family over the years with disastrous results.
Air India started well as a national carrier for a while but then started working like the Government. It became a creaky machine, haemorrhaging money and rewarding privilege. The losses started to nose dive into a bottomless pit.
The BJP Government under Narendra Modi, not yet run by a family, saw no advantage in burdening the nation further. The accumulated debt is already some ₹70,000 crore which is nearly $8 Billion, no mean sum. Moreover the family run party has lost both power and financial muscle, so Air India could be freed from serfdom.
Tata Sons as Talace Private Ltd have bought it back from the Government for $2.7 billion. They are happy they have their baby back after it was wrestled away, adopted and abused by the State. Question now is whether Tatas will be able to nurture it back to a responsible, financially viable healthy grown up airline able to compete with the best. Tatas have shown they can both manage and grow world brands, as they have done with Jaguar Land Rover, once a crown jewel in Britain’s manufacturing. With that record, if anyone can resuscitate Air India’s battered, bruised, tortured financial life back into some meaning, the Tata group can.
The Neta Privilege
People saw him. He has allegedly been videoed on site. He has been named by victims and witnesses as the driver or the instigator of the most heinous yet stupid turn of events in the long running farmer’s dispute. Yet Ashish Mishra, the son of Union Minister of State for Home, Ajay Mishra, says he wasn’t there.
Even with videos flying around the world showing cars ploughing in and eight people dead, the Uttar Pradesh government’s response to the black and white crime was, ‘we will set up an enquiry’. Inquiry is a convenient tool learnt from Colonial times to stifle proper police investigation and even throw the issue into an abyss of ‘political do nothing’.
It was the Chief Justice of India who intervened suo moto, meaning that the Supreme Court initiated a case itself. CJI NV Ramana, and Justices Surya Kant and Hema Kohli form the bench. The SC sent notice to Uttar Pradesh Government for an update on the FIR. It was also not impressed by the ‘Special Investigative Team’ as all the personnel were from Uttar Pradesh and obviously under that government. A day later the SC enquired why the chief suspect had not been arrested.
The Neta’s son did not attend the first summons by the police. A second summon was sent and realising that he would have to be arrested now that the SC was involved, the son went to the police. How many crime suspects have the luxury of ‘walking’ at will into a police station?
Despite a team of experienced interrogators, Ashish Mishra (the Neta’s son) failed to answer questions. So they put him under arrest. The arrest is not for ‘suspected act of terror’ not even ‘suspected murder’ but merely for not answering questions!
Meanwhile, the Neta himself has been busy making excuses for his son. First that he was not at the scene saying, ‘He would have been killed if he were there!’ Then he said son was at a family-sponsored function in the village. And explaining the failure to attend the first summons, that the son was ill.
The incident witnessed by many, if not hundreds, was that Netaji’s son’s four wheeler deliberately ploughed into peaceful demonstrators walking home. Four farmers were killed. The crowd then turned onto the vehicle and its owners. The driver and two BJP members were beaten to death by the crowd. Eye witnesses say that Ashish Mishra was either driving or forced his driver to drive into the crowd. Mishra himself escaped.
The incident has put a spotlight on the BJP government and the PM himself. Will he stand by his promise not to be like Congress Family Raj and sack the junior minister as well as allow the wheels of justice to act unhindered or will be protect the ‘extended BJP family’ as Congress used to do? Prime Minister Modi’s integrity is on line as well.
And Ambani Joins Bezos
While more people are becoming poor in India especially due to the pandemic, there is some good news. Mukesh Ambani has become richer by $23.8 Billion last year. He now joins the very select group of people in the world with over $100 Billion assets, such as Jeff Bezos and Elon Musk.
This will be welcome news to many people in India sleeping rough on the streets and who are still waiting for a decent roof over their head, access to clean water and a decent meal a day. Or they may not notice any change in their lives.
India is poised to show off to the world the return of a refurbished Maharajah – with a benign smile, moustache twirled-up, the red tunic dusted clean and regal turban in place. Air India, the national carrier, will undergo kayakalpa, or rejuvenation, to soon touch the sky with glory, flying higher and better.
It should hopefully be an age-defying transformation, and who can do it better than the mother that conceived it 89 years ago? Air India is purchased by the house of Tata in a landmark deal. The government, struggling to disinvest it for the last two decades, and failed twice, is third-time lucky. This largest, ₹18,000 crore off-loading should open the turf for more.
This has brought optimism in these otherwise toxic times. Even the social media, driven by personal peeves and prejudices of the educated middle classes, is applauding. Cartoons show the smiling Maharajah being welcomed by a beaming Ratan Tata, Chairman Emeritus of India’s largest conglomerate. The sentiment is: oh, why didn’t this happen earlier?
One people who may protest are the workers, with their multiple unions. They haven’t been paid for months. The deal includes a no-sack clause for a year, which is not ideal, but allows for recovery of old dues and a breather. Think of an outright closure or the airline going to someone less resourceful or less humane than the reputation Tata enjoys.
Born in the British colonial era in 1932 as Tata Airlines, AI pioneered Asia’s aviation success story, although Philippine Airlines (PAL), officially founded on February 26, 1941 is considered Asia’s oldest scheduled carrier, still flying under the same name. Post the World War II came decolonization of Asian skies with Cathay Pacific of Hong Kong (September 1946), Orient Airways (later Pakistan International Airlines (October 1946), Air Ceylon (later Sri Lankan Airlines), Korean National Airlines and Malayan Airways Limited (later Singapore and Malaysia Airlines) – all in 1947, Israel’s El Al and Garuda Indonesia in 1948, Japan Airlines (1951) and Thai Airways International (1960).
AI scored many landmarks. It was the first Asian airline to enter the jet age with a Boeing 707-420 in February 1960. Twenty-eight months later, it became the world’s first all-jet airline. It introduced Palace in the Sky livery and branding in 1971. In 1993, its Boeing 747-400 operated the first non-stop New York-Delhi flight.
AI entered the Guinness Book of World Records for the most people evacuated by a civil airliner. During the 1990 Gulf War, over 111,000 people were flown from Amman to Mumbai, a distance of 4,117 kilometer. AI operated 488 flights from August 13 to October 11, 1990 – lasting 59 day. Another airlift from Qatar involving 700,000 Indians begins this month by its subsidiary, AI Express.
For Tata Sons, it’s homecoming. The prodigal has returned, lost and found – lost for no fault of its own. Fourteen years after the legendary JRD Tata found it, the government of newly-independent India felt the need to have a national airline, acquired it 51:49, and then nationalized it in 1953.
JRD was to call this arbitrary. He met Jawaharlal Nehru, but despite best of relations, could not prevent it. Asked to meet Babu Jagjivan Ram, then in charge of civil aviation, JRD was simply informed of the Cabinet decision. The die was cast. Nehru persuaded JRD to remain the Chairman.
Always ready for a national cause, JRD set about building a national airline. Only he could have counselled men against growing long sideburns and women in the crew on tying their hair in a bun that is not larger than their face, or what lipstick to use.
His aides Bobby Kooka and Umesh Rao had in 1946 already created Maharajah, the exotic mascot who never ruled a state, but went on to rule the hearts of its fliers. He became one of India’s most recognizable symbols. In bright destination-driven promotional posters he would appear as a Brit with a bowler hat and umbrella; a Frenchman with a beret; a ruddy, alpine climber from Switzerland or one on an African safari.
The present-day fliers would not know that AI once had one of the best in-service and was among the most-flown airlines. Maharajah definitely ruled the skies and still flies amidst growing competition from minnows. But it never got over the government-corporate cultural and operational contradictions. The momentum Tata gave Air India outlived JRD’s unceremonious sacking in 1978 by Prime Minister Morarji Desai. Thanks to covetous bureaucrats and demanding politicians, the rot set within and competition outside, set in the 1990s. The economic reforms’ launch with new airlines born made AI untenable, but has taken three decades of mounting losses and worse to resolve.
Being the sole owner, the government was hit by a scare that some foreign court might attach and seize an AI aircraft against any dues in dispute. A British firm actually made such a move recently when a PIA aircraft was seized in Malaysia, forcing Pakistan to pay up.
AI’s profits vanished after its disastrous merger with Indian Airlines, the domestic carrier, in 2007. By 2019, the losses mounted to ₹12.8 billion. It has an ageing staff averaging 48-50 years, paid 35-50 percent higher compared to the budget airlines it is competing with. It has no hire and fire policy.
Yet, it has great potential. Apart from its fleet of over 130 aircraft, the new buyer will now have control of the airline’s 4,400 domestic and 1,800 international landing and parking slots at domestic airports, as well as 900 slots at airports overseas. And don’t write off the experienced work force of 1,600 pilots and 2,000 engineers.
Over two-thirds of the airline’s revenues come from its international operations. Air India also owns millions worth of prime real estate. According to the aviation ministry, its fixed assets – land, buildings, and aircraft – are worth over ₹450bn ($6bn). Besides, it has paintings of MF Husain and others and artefacts worth millions purchased in better times.
With Covid-19 hopefully abetting worldwide and Indians flying more and more, recording an annual passenger growth of around 20 per cent, AI is a good prospect. Analysts say the Indian market is vastly underserved. For Tata, it is an opportunity and a challenge. It’s a long haul. A failure could be devastating, but success could turn around AI, like Swissair, British Airways and Lufthansa.
The airline needs money to get cannibalised aircraft – which have been on the ground because of lack of spares and which have been stripped off some parts to be used in operational aircraft – in the skies again. It needs funds to pay off vendors, airport operators and other creditors; working capital needs as well as interest repayments also need to be fulfilled.
A refurbished AI should reclaim the territories and markets lost to others. Adding Air India to AirAsia and Vistara is three airlines too many: their merger is on the cards, and makes sense. There is no lack of either resources or experience. Tata has been on buying spree for the last two decades, acquiring Tetley, Land rover, Jaguar, and British Salt and South Korea’s Daewoo commercial vehicles. They now need to refuel aviation business.
Eventually, it’s au revoir. Maharajah’s line, “Tata does not always mean a goodbye” has proved prophetic.
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